Queensland State Budget 2018-19 has been saved
Queensland State Budget 2018-19
No shocks and no surprises
For a budget that promises to ‘borrow to build’ for Queensland’s future, debt actually doesn’t go up by much. Thanks to a sugar hit from coal prices and dividends in 2017-18, in many ways this budget tinkers at the margins, producing no shocks and no surprises.
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The Palaszczuk Government is back for its second term, with a majority Labor Government and a new Treasurer in the Deputy Premier Jackie Trad. Finding its stride, the Government stays true to form with this budget’s strong emphasis on infrastructure and funding for education and health – and a continued focus on Queensland’s economic fundamentals – ‘rocks, crops and cameras’.
This budget is
Safe, in that it manages to increase expenditure, retain a surplus and deliver on election commitments, all at the same time.
Smart, in that it targets areas that will help the continued transition of the Queensland economy away from those ‘rocks, crops and cameras’.
A brief snapshot
- The economic outlook for Queensland over the next five years is steady as she goes hovering around 2.75%. The 2018-19 peak in economic growth at 3% comes off the back of stronger coal prices and business investment
- Stronger global economic conditions are going Queensland’s way until 2018-19, lifting demand for the key commodity exports that underpin the State’s economic success
- Into the forward estimates it is a different story. Modest growth is expected for exports while prices are likely to decline from current levels – so risky business bumping up against safe
Risky fact: for every one cent movement in the $AUD-$USD exchange rate, the impact on royalty revenue would be approximately $66 million in 2018-19
- Unemployment remains particularly stubborn at the 6% mark across the forward estimates – the job market is expanding but not outpacing the increasing rate of labour force participation. Queensland’s job market is a
If you were playing budget bingo, the
- This budget keeps Queensland in the black – just. The surplus for 2018-19 is boosted by coal prices but across the forward estimates it starts to look more like a rounding error. This is one to watch, especially with changes in GST arrangements with the Commonwealth, looming Gonski reforms and the perpetual risk of natural disasters in Queensland all creating uncertainty
In an important step the budget reports that public service jobs will now grow in line with the population, consistent with one of the six fiscal principles of the Government. Discipline of this will be critical for the ongoing sustainability of the budget
- Delivering on election commitments, the ordinary Queenslander is largely immune from the revenue measures in the budget. Robin Hood taxes are the order of the day – luxury land and car tax increases, along with an increase in duties for foreign buyers. There is one exception, the 15% point of consumption betting tax will affect the hip pocket of those who like to gamble – now extended to include all forms of betting, not just online. There is also a new waste disposal levy to reduce waste generation and provide a source of funding for reinvestment in the waste sector
- $1 in every $2 of general government expenditure goes to health and education in 2018-19 – true to form the Labor Government, is delivering on its commitments. A key expenditure item is Queensland committing to the National Redress Scheme for Survivors of Institutional Child Sexual Abuse, to the tune of $500 million
- $45 billion expenditure in infrastructure investment is planned over the forward estimates with $21.7b of this on transport and roads. $11.6bn to be spent in 2018/19 with more than half of this outside Greater Brisbane.
As is always the case, budgets are about choices. They are a balancing act of competing priorities between the short and long term, between meeting the service needs of people versus fiscal responsibilities.
This budget is an expression of a 2nd term Government – all about delivery - with an eye to another election in just over two years’ time.
Queensland State Budget 2018-19 : No shocks and no surprises
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